Posts tagged ‘heating oil’

To wrap up our series examining commodity prices and US presidential elections, we turned to Jodie Gunzberg, head of commodities and real assets at S&P Dow Jones Indices.

Her recent analysis of commodity returns reveals that oil, gold and 17 out of 24 commodities overall perform better with a Democratic president, while the other seven, including all grains, have been best under a Republican commander-in-chief.

This is the first Oil Big Five post for 2015, and we’re happy to still be sharing with you some of the big issues and topics our global oil editors and analysts are tracking. The start of a new year often brings the dreaded New Year’s Resolutions, and we’d like the oil industry to promise to continue always being interesting, complex, sometimes befuddling, and rife with interesting subplots, some of which we feature below.

If you get nostalgic for 2014 (ah, remember those heady early months with oil prices above $100?), check out our archives, but what we’re really hoping you’ll do is leave us a comment here or tweet us @PlattsOil with the hashtag #oilbig5 with your thoughts about what’s most important in the industry right now.

Here are some of the topics that have caught the eyes of those in Platts offices around the world:

There has been considerable discussion of late about the lack of volatility in some key trading markets, and the impact that is having on trading groups, their profitability, and thus their interest in remaining engaged in certain markets.

The argument has been that low or relatively flat prices have driven some key trading firms — a fair number of which are big banks — from a number of commodity markets, including energy commodities. Some believe the liquidity of some of these markets has taken a hit as counterparties have left, both because of reduced profitability but also as a result of regulatory pressures.

Traditional heating oil may be in the last throes of popularity before it makes way for cleaner-burning fuels like natural gas or lower-sulfur distillate grades.

The product is not the chief heating fuel in the US–the Energy Information Administration estimates that about half of US households use natural gas as their primary heating fuel, compared with 6% using heating oil — but it has managed to cling to about a quarter of Northeastern households. That grip is slipping, though.

CME Group will officially switch the basis of the NYMEX heating oil futures contract from actual heating oil to ultra low sulfur diesel on April 1, a move signifying the beginning of the end for the once-dominant fuel.

The NYMEX switch was prompted largely by increasingly strict sulfur maximums in the US Northeast states, which are the largest consumers of heating oil.